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Microcap & Penny Stocks : PanAmerican BanCorp (PABN)
PABN 0.000010000.0%Mar 7 3:00 PM EST
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To: ColleenB who wrote (39790)7/18/1999 1:02:00 AM
From: wonk  Read Replies (1) of 43774
 
ColleenB:

Just as a point of reference, developing a new ISP is not a trivial undertaking. The following numbers are from a well respected telecom research consultancy, Strategis Group. The report is over a year old, but (IMO) the underlying variables used to generate the projection are still valid.


                                     End of Year 4
                           Local       Regional       National
                      (Values in millions except for subscribers)
	
Mkt size                      1.3         14.3           208
Subs (actual)               8,000      162,000     1,013,000
Revenue	                      1.8           34           389
EBITDA	                      0.2          1.7            51
EBITDA Margin	               11%           5%          13%
Cumulative Free Cash Flow    (1.7)       (21.3)       (172.0)


Certainly there is a business opportunity, but it takes significant amounts of cash to build the business. The local and regional operators don't go free cash flow positive till the 5th year. The national operator does it in the fourth.

Free cash flow is defined as Net Income + depreciation and other non-cash charges - capital expenditures and required changes in net working capital.

One can look back through Mindspring's SEC filings - or RCN's (look for the acquisition of Erol's Internet) to get a feel for the soundness of Strategis' projection.

ww

fyi - a single T3 connection to the internet goes for about $32-35 thousand per month.
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